As winter approaches in Pakistan, concerns are rising over an impending gas shortage that could lead to up to 18 hours of load shedding.
The crisis stems from uncertainties surrounding the arrival of a scheduled LNG cargo from Azerbaijan's state-owned company, SOCAR, in January 2024.
According to officials from the energy ministry, the absence of this cargo could worsen an already anticipated gas deficit.
Initially projected at 360 million cubic feet per day (MMCFD) for December 2023, the gas shortfall is expected to increase to 470 MMCFD in January 2024.
These estimates account for limitations on gas availability with domestic sectors facing restricted access to gas for only 8 hours during cooking times.
The potential exacerbation of the crisis hinges on the uncertainty surrounding the arrival of the SOCAR cargo in January. If the cargo is not received, there is a possibility that the government may further reduce gas availability to domestic sectors, limiting it to just 6 hours.
Reports suggest that SOCAR might be unable to provide the distressed LNG cargo for January due to potential challenges in the supply chain.
The LNG cargo agreement between Pakistan and Azerbaijan, initiated during Shehbaz Sharif's tenure, secured a monthly supply, but it appears to be encountering obstacles.
While an agreement was signed in July 2023, extending for a year and possibly more, SOCAR's hesitation for January is attributed to evolving dynamics in Western economies affecting distressed LNG availability.
Despite the uncertainties, there is still a window of time for SOCAR to present an offer for January 2024.
Pakistan LNG Limited (PLL) is also taking steps to address the situation by planning to market tenders for spot cargoes in January. PLL is seeking exemptions from certain regulatory timeframes to expedite the process.
Both the Sui Southern and Sui Northern companies are expected to experience an energy deficit with the shortfall in January potentially being more significant due to the prospective non-arrival of the SOCAR LNG cargo.
In response, Pakistan is exploring options with Qatar to increase gas supply.